Indian Market Cycle from 2018-2020 end

Being active in market for last 5 years and haven't missed a single session in market in these years, I had witnessed rally in midcap and smallcap from 2016 end to 2018 and also Covid Crash in Feb-March 2020. Out of all these experience, I am sharing one learning from market based on observation from 2018-2020 end. This is one market cycle where we had seen correction and rise in stock market.

Now let's see and understand Nifty chart during this period.

I had divided this chart in five phases: A to E and while reading this blog please ignore all the events although market had moved based on some events like 2018 Budget: Introduction of LTCG, 2019 Election, Corporate Rate Cut, Covid Crash. Phase A (From Feb 18-Sept 19): In this phase, Midcap and Smallcap stocks and indices had made its top and they went into corrective phase after a good rally in them before this phase. Nifty was supported by largecap and they continue to push Nifty higher. Phase B (From Oct 19-Feb20):

This was a small pullback for broader market where all stocks (large, mid and smallcap) had performed and pushed Nifty up to its new high of 12400. Phase C (From Feb20-Mar20):

In this phase all stocks had corrected huge. Some largecap were down by 50%. Nifty made low of 7500 in this phase. This was the end of the corrective phase that started from Phase A for broader market.

Phase D (From Mar20-Sep20):

In this phase Nifty had rise from its low of 7500 to 11500. Here many largecap and heavy weight stocks of Nifty like Reliance, FMCG and IT Pack had participated and pushed the market up. Very few smallcap and midcap stocks had performed in this phase. In this phase advance to decline ratio was not favourable as there was not broader market participation.

Phase E (From Sep20-Dec20):

In this phase there was broader market participation and Mid/Smallcap stocks those were in correction from 2018 had performed. Many stocks had given more than 50% returns and some stocks had even crossed its all time high that was made in 2018 or before Feb Crash. Market Cycle Observation: Mid/Small/Microcap stocks start performing in last phase of Bull cycle as seen in 2017 rally. Then Mid/Smallcap started their corrective phase first followed by Largecap. When largecap stocks starts their correction this means its in last phase of the the bear cycle. Then Largecap starts performing first as seen from March 2020 and then Mid/Smallcap starts performing later in the last phase of bull cycle. Note: This cycle/phase can last from few days to many years. No one can predict the duration of this cycle. So don't take any position from these observation. Follow the primary trend always with stop loss in your trades or investments.

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